Business and Technology Insights

Making Procurement Programs Successful - A Practitioner’s Guide to Procurement 4.0

 
March 12, 2019

Business 4.0™, the thought leadership framework proposed by TCS, paves the way for the business leaders across functional domains to leverage digital technologies in their growth and transformation journey. Business 4.0™ is about harnessing the abundance of resources by being intelligent, agile, automated and on the cloud. To apply Business 4.0™ in procurement, the first step would be to envision what it means for procurement, and second, help teams to deliver and achieve the new age of buying.

Procurement in Business 4.0 context, let us call it Procurement 4.0, can be characterized by boundary-less procure to pay functions, with capability to act on “here and now” spend insights, offering zero-touch smart buying, while leveraging internal and external supply eco-systems. Procurement 4.0 framework can help organizations adopt agile, automate intelligently, leverage prescriptive business intelligence, improve supplier engagement and help make changes flexibly.

The concept traverses multiple procurement functions from contract lifecycle, supplier performance, catalog-based requisitions, PO-based buying, supplier self-service, and invoice automation including - matching, exception routing, approvals, and payment processing. Procurement 4.0 can also help organizations achieve intangible benefits such as leaner operations, greater spend visibility, responsible buying, and better buyer and seller experience.

In this blog, I have tried to offer a few practical insights from a solution partner’s perspective to make the Procurement 4.0 journey successful, while not elaborating on the solution aspects.

Have transition cycles with focused objectives

Achieving the intended benefits can easily turn out to be an illusion in absence of focused end goals and a viable path to achieve them. Planning based on focused transition cycles is going to gain greater relevance in the Procurement 4.0 world as the digital technologies throw open far wider, evolving and easy-to-reach choices to experiment with, learn-unlearn and adapt. Hence, transition to Procurement 4.0 can neither be a one-step change nor can have one single best path. In fact, organizations need not even have a fully laid out orbit. What would work best is to have cycles with focused objectives such as cost reduction, compliance improvement and waste reduction.

Think big but scope right

A significant aspect of focused transition cycles would be to identify the right scope that is neither too wide nor too narrow. Choosing a big bang program with scope from contract to accounts payables (AP) process would be too much to handle. Similarly, a narrow scope such as scanning, catalog management or vendor portal would rarely give meaningful benefits. Recommendation here is to be right sized and to have a combination of two or three processes such as AP and supplier portal; spend and sourcing or, requisition and catalog, focused on measurable end goals.

Aim out of the box, but not out of the context

Another noteworthy aspect that comes up frequently in our surveys, conversations and feedback exercises is that of having compounded expectations. The compounding is a result of a combination of heightened perception about the technology and array of aspirations from across the quarters including the product, the partner, the IT team or even suppliers. Anticipations such as achieving “100% accuracy” or “less than one day turn-around-time (TAT)” or “everything automated” or “everything real time” from day one are better contextualized upfront rather than taken as outside-in goals.

Break the acceptance barrier, not the soul

Procurement 4.0 needs a very strong stakeholder benefit management, especially as there are external and cross-departmental actors such as suppliers, finance and legal. Lack of desire for change, non-adoption of product processes, organization silos, budget controls, complex and legacy workflow rules and insisting on “current system works like that” are some pitfalls to look out for. Programs that get into catering to ‘unique’ requirements of every department face multiple times overruns on cost, schedule and effort and face significantly reduced ability to change in the future. Thankfully personalization, self-help, ‘e-commerce’ like user interface, flips, gamification and improved notifications help improve user adoption.

Do not miss the wood for trees

Next comes the perspective or the over-arching theme that drives the program charter. A procurement program can easily lose sight of the larger goal and drift towards over-doing traditional 'Procurement' functions like negotiation, transactional purchasing, invoice payments and other immediate matters. The program manager plays a strong catalyst in keeping the program true to its course and taking along partners and suppliers. Such a manager must come with a fine balance of expertise and experience as the Procurement 4.0 world is about learning and unlearning. It is not the years of experience, but ability to think and act agile, that is going to be the need of the hour.

While the technologies of the Business 4.0 world are poised to offer transformation opportunities that may have been beyond imagination in the past, ranging from block chain to machine learning, do you think that the businesses are also keeping the key success factors in view, as they commence their Procurement 4.0 journey?

Raj Agrawal heads TCS Platform Solutions, a strategic growth business unit in TCS. TCS Platform Solutions help customers accelerate their digital journey for functions such as Finance, Human Resources, and Procurement. Raj is responsible for conceptualization, engineering, solutions and delivery of these products and platforms. Prior to this, Raj was the Global Practice Head of Enterprise Solutions managing the Customer Relationship Management (CRM) and Oracle Enterprise Practices. In his career spanning 27 years, Raj has played multiple roles including delivery management, development of products and multimedia solutions.